American Business: Engine of the Opportunity Society

Report Political Process

American Business: Engine of the Opportunity Society

July 10, 1998 15 min read
Thomas Donohue
Policy Analyst

This lecture was held at The Heritage Foundation on April 23, 1998.

A year ago, the U.S. Chamber of Commerce approached me and asked whether I would like to assume the leadership of that organization, which I had been a part of some 13 years before. One of the first things I did was to call my friend Ed Feulner, President of The Heritage Foundation. Ed told me there was a great need for leadership at the Chamber of Commerce; that a Chamber of Commerce with new ideas, new energy, and new focus would really help Heritage accomplish what it was trying to do. We agreed that if I became President of the Chamber of Commerce, we would work together. I don't know what Ed did behind the scenes, but some people tell me that he was instrumental in making this happen.

So, here I am.

I accepted this challenge because I believe business needs an organization of vigorous energy and high competence to represent its interests in Washington, D.C., and around the world. More important, I think it is time for business and the free-enterprise system to stop apologizing for being the one thing in this country that really works.

The Chamber of Commerce is a fascinating organization. It has a national and international franchise with extraordinary representation around the United States and around the world. And yet, to speak the truth, the Chamber is--and has been--in some disrepair. This has been driven in part by the way business has changed its operations and the way it has altered its methods for lobbying the government and strengthening its influence in Washington--the development of strong single-industry organizations, for example. But I think the Chamber has suffered by not staying up with those changes. We can reach 3 million businesses. We have a strong staff, a wonderful location, a great heritage. And we've allowed those advantages to slip.

Some people would tell us that the economy is so strong and that America is doing so well--both at home and around the world--that there is no need for expanded expenditures and investments in the kinds of programs that your groups are running and that I am trying to put together. But the free-enterprise system--the right to succeed and the right to fail, the right to challenge and the right to invent--can be protected only if we are more vigilant and more aggressive at a time of comfort and prosperity.


The United States has an $8 trillion economy, driven by the most productive, competitive business system in the world. We employ five out of every six workers. We create 107 million jobs. We create 200,000 new jobs every month--that's equivalent to the population of Akron, Ohio. Our companies provide health care for 140 million people. Our payroll taxes amount to $670 billion. We contribute $6 billion to health care and charity and public goods, and another $10 billion comes from foundations that were created as a part of business. As important as all these contributions are, however, there is an even greater gift that enterprise and business provide in this society: opportunity and prosperity. We have to stop apologizing for doing this as a part of the American system.

Look at the shape of American business today and you will see what I mean. It's not run or dominated by a small handful of large companies (although we're seeing consolidation in the banking industry, as we should, to compete with worldwide financial institutions). There are only 6,000 companies in the United States with 1,000 or more employees; 16 million have 20 or fewer employees. More people in the United States work in woman-owned businesses than are employed in all of the Fortune 500 companies put together. That's what America is about.

Despite all the good things that we're doing for our country, to paraphrase Winston Churchill, some see private enterprise as a cow to be milked. Others see it as a predatory target to be shot. Few see it as the sturdy horse pulling the wagon. Well, Mr. Churchill, we believe that business has been shot at enough, and we plan to get up and shoot back.


On the day I took this job, I had dinner with the selection committee. It was a fascinating meeting that went on for about five hours. As I left to go home, I felt momentarily like the dog that had chased the truck and caught it. Now what? What am I going to do with this thing? I talked to Ed Feulner and lots of other people, and we laid out a plan.

First, before anything else, we wanted to fix the infrastructure, the foundation on which the Chamber of Commerce was built. We had to stop the erosion of membership and sign up new members. We had to put money back in the bank to fund our projects. We had to build stronger relationships with the state and local Chambers so there would be a mechanism to influence government; because whatever you think, the federal government is not influenced from Washington, D.C., but in Georgia, in Peoria, and Chicago. The government may be guided and persuaded in Washington, but real influence comes from the grass roots.

I talked to 1,300 Chamber of Commerce executives in just seven months. The national Chamber of Commerce made a deal with our state and local affiliates: If they can find one business leader--from a company small or large--willing to serve on the state Chamber board and on our national board as well, we will put him on. We have expanded our board so that we can build a real federation of interests to strengthen our influence in Washington.

We also looked at the national Chamber's own businesses. Some of them were setting bad examples by losing significant amounts of money. I am shutting them down or revamping them so they can make money. And most important, we are going to hire the best people we can find. In this organization, good is not good enough; we need great minds, inventive workers, and courageous people--and we're going out to get them.

This first part of the agenda is affectionately called "painting the outhouse." The second part is more interesting: to focus on what our members really want. Our members want influence with the White House, with government agencies, with Congress, and with governments around the world. To achieve that influence, we have to be very focused. We are re-energizing our research foundation to look at issues before they come before our board and before they come before the Congress. We plan to develop, with your help, solid arguments, sound policies, aggressive statistics, and cause-and-effect analyses that will let Congress, the White House, and others understand what happens when they choose one policy over another. We will undertake cooperative arrangements with many different organizations because we are eager to take good ideas and good information wherever we can get them for a fair price.

Our members also want us to expand significantly our capacity on Capitol Hill and in Washington. We're building a strong staff of able lobbyists, strong policy people, and vigorous political folks. One of the difficult things that I've had to do is to convince the Chamber and Members of Congress that the only way for us to advance our agenda legitimately is in a bipartisan way. There are not enough votes in any one party to accomplish what we have to accomplish for business. We have to work with conservative Democrats--people who believe in what you espouse--to get the votes that we need. I've worked very closely with them, and we're making some progress.

For the past 20 years, the Chamber of Commerce has had its own law firm. Our vision here is simple: After we talk to a regulatory agency--after we inform it, after we try to persuade it, after we lobby it, after we plead with it--if it doesn't listen to us, we sue it. And we usually win. For example, the Occupational Safety and Health Administration not long ago operated as an extortion program. It was very simple: "You agree to our terms and we won't inspect you. If you don't agree, we'll come around every day with intrusive inspections." We got that policy thrown out in about ten days.

Using our research arm, our lobbying arm, and our legal arm, we are going to Capitol Hill with an agenda of things we agree on. We are committed to sound and reasonable trade. We are committed to a strong transportation bill. We are committed to seeing that our country has much better health care law than "Clintoncare." We are committed to the issues that are critical to our economy and to our individual and personal freedoms.

The third part of the plan was the most challenging to me. We asked a lot of people this question: "What are the five or six things that, if the Chamber of Commerce did them well, if we put money and people and programs around them, would be good for our country, for our fellow citizens, and business?" Six items came up most frequently.

First, an absolute explosion in frivolous lawsuits and class-action litigation is sucking the vitality out of American invention, out of American health care, out of pharmaceuticals, out of the development of technology, and out of anybody who dares to make a dollar in a competitive environment. I believe it is time to go to the American people with the facts about who is filing all these lawsuits, who is getting the money, and who is left with no benefit whatsoever. If these tobacco suits go forward as originally structured, for example, a very small group of class-action lawyers will end up next year with, after taxes, $35 billion to advance their agenda. We at the Chamber have just created an institute to bring together everyone who is working on these issues. We are going to devote significant resources to it, and we intend to become a perpetual migraine headache for those who are destroying American business with these lawsuits.

The second issue we are going to pursue deals with labor union leaders. Years ago, when I was with the U.S. Postal Service, I negotiated labor contracts with very tough labor union leaders--the toughest guys you ever dealt with. But they all believed in a strong national defense; they believed in exporting democratic values; they believed in trade; and they believed in their members with a passion. Labor union leaders today do not necessarily share those views. They are more likely to be to the left of Representative Richard Gephardt (D-MO) and promoting very strong agendas of their own using their members' money. At the same time, they are running campaigns against legitimate companies, trying to make a politburo out of the National Labor Relations Board, and trying to force the government to contract only with companies that have labor unions. The Chamber of Commerce will to work to combat these abuses.

Third, we are committed to challenging the activities of radical environmentalists who would stop the great American dream. American business has spent more than $1 trillion in the past two decades to clean the air, water, and land. Our success has been miraculous, and we can do a lot more. But what the government is proposing now is frightening. No single company and no single industry can challenge it; but together we can.

Our fourth issue looks at a very important problem in American industry and in our economy: We are running out of workers. Three percent economic growth and 4.6 percent unemployment mean that in the next few years we are going to be out of skilled workers, out of moderately skilled workers, and out of unskilled workers. The problem is exacerbated by the high numbers of retirements we can expect in the next few years as the working population ages. What do you do? Welfare-to-work is one avenue we are going to look at. Another is incentives for able, retired people to go back to work. We need aggressive programs of immigration. I know there are tremendous concerns about immigration, but remember that we are a nation of immigrants.

Fifth, we have to place great emphasis on the many ways Americans benefit from trade. All of the gross increase in economic activity in Massachusetts, Michigan, Indiana, Illinois, and California in the past ten years came from trade. Many of the congressmen in those states, however, are prepared to vote against trade legislation at the drop of a hat. I'm not going to blame them; but I will blame the business community for not carrying the message to the people that we all benefit from trade.

Finally, the United States has to stand up and do something about the problems of crime and drugs. Eighty-eight percent of the people in our growing prison population are there for some reason associated with drugs or alcohol. Now, the Chamber of Commerce can't be the Department of Justice and it can't be the police, but there are two things we can do:

  1. We can go across the country and locate successful programs to combat crime and drugs that are run by local groups and companies. We can catalog those programs and share the information with people around this country. We can encourage them: "Somebody else did this program and it worked. You can do it, too."

  2. We can talk to companies and industries across the country and point to those industries that have refused to tolerate drugs and alcohol in the workplace. If we do that, we will set an example and bring a reduction in drug and alcohol use, as well as an accompanying reduction in crime. We're going to try very hard.

If the Chamber of Commerce is successful in our three-part revitalization program, two things will happen. First, we will have a much stronger Chamber that will be able to bring local Chambers together with associations and companies large and small to accomplish things. Second, American enterprise and American business will be able to stop apologizing for being the thing that really works in this country.


Allow me to get back for a moment to the environment. Right now, many Americans are observing Earth Day. I want Earth Day 1998 to be remembered as the day on which business came out of hiding, moved off the defensive, and told the story of what we've done with $1 trillion. Business has made a major effort and achieved significant success in cleaning the air, the water, and the land. Since the inception of the Clean Water Act in 1972, for example, we have put together 64,000 agreements between companies and governments to clean America's waterways fundamentally. Statistic after statistic demonstrates this commendable record.

Air quality has improved dramatically since 1970. There is no more lead in the air. Particulate matter has decreased by 78 percent, and the six common air pollutants have declined by more than half. But now we have a problem: We went out on the football field, got our money and our people together, and charged down this 100 yards until we were about to score. As we got to about the 20-yard line, however, we looked up and found out that we were on a 600-yard field because the government had changed the rules.

Pollutants used to be measured by parts per thousand and parts per ten thousand. Technology has improved, however, and we now have a whole series of new rules on particulate matter and haze based on parts per billion. When they go into effect four years from now, the number of cities in this country that are not in compliance will quadruple. No more growth, no more building, no more hiring --the federal government is going to dictate what you can do in those towns.

Then there is global warming. Under the agreement reached in Kyoto, Japan--from which 130 countries are excused--the United Nations is going to dictate to us how to run our domestic policy. I believe we should be very thoughtful about global warming. In the 1930s, I remember, there was a big rush on global warming. From the 1940s to the 1970s, we had a major crisis over global freezing. Both were caused by the same problem, we were told. Now we've begun worry about global warming again. But the Navy tells us now that data from its satellites and balloons indicate we're moving toward global cooling. What is the right science? What is the right economics? What is the right common sense?

And then we have the piece de resistance: The Clinton Administration, which for months has been talking about enterprise zones to bring business and jobs back to the inner city, is about to endorse something called "environmental justice." This is how it works: If you have a factory or some sort of energy source in an area in which there are protected classes or minorities--be it on an Indian reservation or in the middle of an inner city--you can be sued under the Civil Rights Act because you are denying those people their civil rights by polluting. The government then can require businesses to do all manner of things that will make it impossible for them to operate. Did Congress legislate this? Not at all. President Clinton will do this with a stroke of his pen on a document that says if you take any federal money in your city--and who doesn't take some federal money for roads and other things?--then you have to comply with these rules. It is time to stop the harmful foolishness and ask some fundamental questions.

Here is the best example of environmental foolishness that I've heard: A hospital is being built in California at a cost of half a billion dollars. Eleven special fruit flies live in that area. People tell us they will all be dead by the year 2000. Nevertheless, this hospital was required to set aside eight acres as habitat for the flies and reroute its road. On top of this, the environmentalists actually wanted to close Route 10 in California for the six weeks of the mating season of these 11 flies. Let's get a fly swatter and get on with some reality here!

It's time to look at the environment in a different way. We need to spend another billion dollars--maybe another trillion dollars--to clean up the environment. But we need to act in an orderly fashion, without the paperwork, the lawsuits, the intrusion of all sorts of government inventors that concoct a new program every day. We need to go forward with an environmental policy that values performance over paperwork. Regulations must be based on hard numbers, clear science, and common sense. There must be realistic targets and maximum flexibility on how to achieve them. Most of all, we need a spirit of cooperation.

I'd like to get the county's governors together in one room--those people think right--and ask them some tough questions: Where do we really want to go? How much are they are willing to spend? Would we not be better off using a little common sense as we went about cleaning the environment? If we did that, we could still get cleaner air, water, and land, but we also could save maybe half a trillion dollars that we could spend on our children's education, on their health care, and on their well-being.

You know, the power of ideas is stronger than any of us realize. And the power of ideas is enhanced by having some sort of delivery system. That is, ideas kept among a few people don't have the same value as ideas expanded throughout our society. I think the people at The Heritage Foundation and the other think tanks need to continue their efforts to propagate their ideas. I want the Chamber of Commerce to steal great ideas. I want us to adopt them, partner with them, and use our tremendous resources to propagate them.

I salute you and appreciate everything that you and your fellow organizations have done to help us. You lead, we'll follow, and we'll go and get them.


Thomas Donohue

Policy Analyst